What is the Landlord and Tenant Act 1954?
The Landlord and Tenant Act 1954 is a law that primarily deals with commercial property leases. It is one of the most important regulations that you should know to build a good relationship with your landlord. Its main purpose is to provide specific protections and rights to commercial tenants and landlords.
Below are the key points of the Landlord and Tenant Act 1954. We always recommend tenants seek their own legal advice as there is a lot more to this than what we have outlined.
Table of contents:
- Section 23: Requirements for the Act to apply
- Section 24: Termination of a protected lease under the Act
- Section 25: Lease termination by the landlord
- Section 26: Lease renewal process
- Section 27: Lease termination by the tenant
- Section 30: Landlord and Tenant Act 1954 grounds for opposition
- Why is the Landlord and Tenant Act 1954 important?
- FAQs about Landlord and Tenant Act 1954
Section 23: Requirements for the Act to apply
Section 23 of the Landlord and Tenant Act 1954 implies that to be protected by the Act, there has to be a commercial lease in place. There are three essential conditions to be achieved in order to be protected by the Landlord and Tenant Act 1954, which are:
- There should be a fixed-term tenancy.
- The tenant must occupy at least part of the premises.
- The industrial unit must be entirely or partly used for a business. If they only use part of it for business, they can only renew that part of the lease.
Section 24: Termination of a protected lease under the Act
Section 24 of the Landlord and Tenant Act 1954 outlines the procedures and grounds on which a landlord can seek to terminate a lease. The Act states that your lease will only automatically expire at the fixed term if the landlord or the tenant terminates the lease by serving notice under the Act. This process is also known as ‘holding over’, meaning you can directly request a new lease from your landlord, and your landlord can only refuse based on specific legal reasons.
Section 25: Lease termination by the landlord
Section 25 of the Landlord and Tenant Act 1945 provides guidelines for a landlord to terminate a commercial lease under certain circumstances. If the landlord wishes the tenant to vacate the property or offer a new lease with different terms, they must serve Section 25 notice within 6 to 12 months before the lease ends.
The landlord can terminate the lease only if:
- the tenant fails to comply with the lease terms,
- the landlord intends to redevelop the property,
- the landlord desires to occupy the property themselves for business purposes,
- the tenant has consistently failed to pay rent,
- the landlord can offer the tenant a suitable alternative property for their business,
- the tenant has become insolvent or bankrupt, significant violations of the terms and conditions of a lease agreement.
Section 26: Lease Renewal Process
If you’re a commercial tenant looking to renew your lease, you’ll need to start by issuing the Section 26 notice with the help of a surveyor. Section 26 of the Landlord and Tenant Act 1954 document outlines the terms you want for the new lease, including the lease length and expected rent.
You must provide Section 26 to the landlord within 6 and 12 months before the lease expiration date, the exact notice period can vary depending on the lease terms and any prior agreements. After sending the Section 26 notice, you’ll have to wait for the landlord’s response, which should come within two months, letting you know if they agree to your request. The landlord has the option to either agree to the renewal on the proposed terms, negotiate different terms, or decline the renewal based on specific grounds outlined in Section 30 of the Act. If the landlord refuses to renew the lease, there may be a right for you to claim compensation for the requirement to vacate the property. This is known as “compensation for loss of the tenancy”. It’s essential that You and your landlord should agree to any of the lease renewal terms in writing.
Section 27: Lease Termination by the tenant
Section 27 of the Landlord and Tenant Act 1954 lets you have the right to end your lease if you’re a tenant with a fixed-term lease. To do this, you must give your landlord a written notice at least three months before the original lease would naturally end. But this right to end the tenancy won’t apply if you’ve been occupying the right of tenancy for more than a month already. So make sure to give notice before the first month is up if you want to use this option.
Section 30: Landlord and Tenant Act 1954 grounds for opposition
Section 30 of the Landlord and Tenant Act 1954 sets out seven grounds for a commercial landlord to oppose granting a renewal lease at the end of the contractual term. The landlord may oppose a renewal lease application under such following grounds:
- Tenant’s failure to make repairs,
- Consistent late rent payments,
- Significant violations of other responsibilities,
- Offering other accommodations,
- Subletting for a higher rent,
- Landlord intends to demolish or reconstruct the property,
- Landlord wants to occupy the property for their own use.
Why is the Landlord and Tenant Act 1954 important?
Landlord and Tenant Act 1954 is very important for commercial leases as it becomes a guideline that regulates the relationship between commercial landlord and tenant. Here are several reasons why the Act is important:
- Security of Tenure: One of the most significant aspects of the Act is that it provides commercial tenants with a degree of Security of Tenure. Security of Tenure is the right that lets tenants get a new lease at the end of the term. This helps businesses plan for the future, knowing they can continue to occupy their premises. This applies to the lease unless the landlord and tenant have agreed to opt out of Sections 24-28 of the Landlord and Tenant Act 1954 at the start of the lease.
- Balancing landlord and tenant rights: The Act will balance the rights and interests of landlords and tenants so that there will be no misunderstanding during the lease. It provides a mechanism for both parties to request, terminate, or oppose the lease.
- Legal framework: The Act establishes legal procedures and protections for both landlords and tenants. This framework helps ensure that disputes are resolved according to established rules, reducing the need for costly and time-consuming litigation.
If you are an Industrials tenant and looking for more information about the Landlord and Tenant Act 1954, feel free to get in touch with your Customer Engagement Manager.
If you’re looking to lease an industrial unit for your business, Industrials offers a wide range of suitable industrial units and warehouses, complete with flexible lease options. Contact us via email or give us a call at 0800 122 3330.
FAQs about Landlord and Tenant Act 1954
What is inside/outside the Act?
Being ‘inside’ the Act means the Landlord and Tenant Act 1954 provisions protect a lease, and the tenant benefits from the security of tenure. For a tenant to be ‘outside’ the Act, they have to ‘contract out’, which means that the provisions of Section 24 to Section 28 do not apply. This is usually done by the landlord serving a specific notice to the tenant, which the tenant must accept and sign. The lease will also expressly state that it is contracted out.
What leases does the Act 1954 apply to?
Landlord and Tenant Act 1954 primarily applies to commercial properties in England and Wales. It also has different regulations and rules compared to residential tenancies. Certain types of tenancies, such as very short-term leases and certain properties (e.g. agricultural properties), may be excluded from the Act’s provisions.
What is Security of Tenure?
Security of tenure is a set of legal protections and rights for commercial tenants. This protection is designed to make sure that tenants have specific rights and safeguards to prevent landlords from evicting them or refusing to renew their lease without good reason. Security of tenure also means that the tenants will have the right to request a new lease after the original term of their lease has ended. It’s all about giving tenants stability and protection so they can keep leasing an industrial unit under certain conditions and terms.